The Crown will negotiate with Tranz Rail Limited to buy back the lease for the Auckland rail network, Finance Minister Michael Cullen said today.

Dr Cullen made the announcement in Auckland after he and Transport Minister Mark Gosche had first advised Tranz Rail and the Auckland Mayors.

"The lease covers the basic infrastructure - track, bridges, signals, buildings and tunnels. It does not cover the trains or rolling stock. And there is no way the Government plans to get back into the rail business," Dr Cullen said.

"Instead, if a deal is struck and the purchase goes ahead, the Crown's intention would be to sublet the lease to the Auckland local authorities through a special rail Local Area Trading Entity they intend to set up.

"Central Government is keen to assist Auckland in dealing with its traffic congestion problems and sees rail as an important part of any solution," he said.

The Auckland local authorities have been negotiating with Tranz Rail to buy the lease and came to the Government for assistance in financing the package. The two parties had conditionally agreed a price of $112 million.

"The Government believes $112 million is too high. However our main reasons for replacing the Auckland local authorities at the negotiating table are strategic.

"We want to protect the integrity of the rail network and to secure access to the rail corridor. We are also developing a national rail policy, and do not want this to be pre-empted by events in Auckland.

"A team of officials will conduct the negotiations with Tranz Rail on behalf of the Crown," Dr Cullen said.

Ends

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